India's love of gold, and the world's weaker economy has caused a deeper than expected trade deficit on the subcontinent.

India's trade deficit rose sharply to $20.1 billion in May, significantly above the $16.4 billion average of the past year. Exports continued to disappoint, falling 1.1% year over year in May. Imports meanwhile rose 7.0% thanks to precious metals.

The wider trade deficit in India is mostly driven by a jump in gold and silver imports, which increased around 90% year over year to $8.4 billion in May. Oil imports remained balanced, totaling $15 billion versus an average of $14.7 billion in 2013 year to date. Oil is another thorn in the side of India's trade deficit.

But gold, for the moment, is the biggest stickler.

Higher gold imports were partly driven by strong retail demand in April, Capital analysts led by Rahul Bajoria said in a note to clients on Monday. However, with import duties being hiked substantially to 8% on gold and prices stabilizing at a lower level, Bajoria and his colleagues at Barclays say they expect gold demand to be significantly lower in June, and possibly remain low in coming months.

"The widening in May might mark a near-term high for the trade deficit, and we think it could narrow significantly in June," Bajoria wrote.

The non-oil, non-gold trade deficit remains low, at $1.8 billion on a three month annual basis, significantly below the one year average deficit of $3.1 billion, he said.

Nonetheless, India’s current account deficit is likely to remain elevated in near term and financing it will be a challenge, Barclays analysts said.